ASV Reports Second-Quarter Results

GRAND RAPIDS, Minn. – ASV, Inc. reported its net sales for the second quarter of 2002 increased to $14,713,936, the highest quarterly net sales figure in the company’s history, compared with $14,226,161 for the same period in 2001. Due primarily to a steep increase in the Company’s gross profit percentage, net earnings increased more than ten-fold to $1,013,503, or $.10 per share, for the second quarter of 2002 compared with $90,774, or $.01 per share, for the second quarter of 2001.

For the six months ended June 30, 2002, net sales totaled $20,891,764, compared to $27,180,877 for the same period in 2001.  Net earnings were $647,922, or $.06 per share, for the six months ended June 30, 2002 compared with $294,744, or $.03 per share, for the same period in 2001.

“Second quarter 2002 saw a return of undercarriage shipments to Caterpillar Inc. for use in the first two models of our jointly-developed Multi-Terrain Loaders™ (MTL),” said Gary Lemke, President of ASV, Inc. “The second quarter of 2002 was our first full quarter of production of our RC-50 which experienced strong demand.  In addition, we began shipping the newest product in our R-Series product line during the second quarter of 2002, the R-50, the companion product to our RC-50. 

To view the ASV RC-50 in action, please click here: ASV RC-50.

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As expected, ASV had no shipments to Polaris Industries Inc. (NYSE: PII) of the private label version of ASV’s RC-30, the Polaris ASL-300, during the second quarter of 2002. All of these items contributed to our increased gross profit percentage and net earnings for the quarter, even as we increased our investment in research and development with Caterpillar for the development of future MTL models.”

ASV experienced increased sales during the second quarter of 2002, even after recording sales returns of approximately $1,058,000, which directly reduced the Company’s sales. These returns relate to product sold in prior periods which were returned to ASV from one of its dealers in 2002. The Company does not anticipate further product returns from this dealer. ASV had originally anticipated these machines would be remarketed to other dealers, but instead chose to utilize these machines in its new rental program which began in the second quarter. 

Under this rental program, machines are being placed at rental facilities within Minnesota, with ASV receiving a share of the rental proceeds. If the rental facility wishes to purchase the machine, all rental proceeds previously paid to ASV during the initial 90-day period are applied to the purchase price of the machine. Commenting on the new rental program, Lemke stated, “We have always believed that once a customer uses one of our machines, the chance of purchasing the machine increases greatly. This rental program gives more customers the opportunity to experience the features and benefits of an RC-30.  We have already had several rental machines convert to sales from this program.”

Discussing future MTL shipments, Lemke continued, “Because of production issues unrelated to ASV’s undercarriage which have been experienced at Caterpillar’s North Carolina production facility, the overall quantities of MTL undercarriages to be shipped in 2002 is expected to decrease from levels originally anticipated. Production of the undercarriage for the next two MTL models, which had been planned to start at the end of the second quarter, went into production in mid-July. Production of the undercarriage for the fifth and final MTL model is now expected to begin in the fourth quarter of 2002.”

Discussing ASV’s overall outlook for 2002 Lemke states, “Based upon the results we have achieved during the first half of 2002, and the expected decrease in undercarriage shipments to Caterpillar, we have revised our sales expectations for 2002 to $55-60 million, with earnings for 2002 expected to be in the range of $.26-.34 per share.”
 
Note: The statements set forth above regarding ASV’s future expected sales and earnings levels and its expected production dates and volumes of its undercarriages for sale to Caterpillar are forward-looking statements based on current expectations and assumptions, and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements.  Certain factors may affect whether these anticipated events occur including ASV’s ability to successfully manufacture the machines, unanticipated delays, costs or other difficulties in the manufacture of the machines, market acceptance of the machines, continued deterioration of the general market and economic conditions, corporate developments at ASV or Caterpillar and ASV’s ability to realize the anticipated benefits from its relationship with Caterpillar.  Any forward-looking statements provided from time-to-time by the Company represent only management’s then-best current estimate of future results or trends. Additional information regarding these risk factors and uncertainties is detailed from time to time in the Company’s SEC filings, including but not limited to, its report on Form 10-Q for the period ended June 30, 2001.