Gehl Company Reports Record Sales; Announces Three-for-Two Stock Split

WEST BEND, Wis. – Gehl Co., a worldwide manufacturer and distributor of compact construction and agricultural equipment, today reported record quarterly net sales of $138.2 million for the quarter ended July 2, 2005, an increase of $42.7 million, or 45 percent, from 2004 second quarter net sales of $95.5 million. Net income for the quarter was $5.6 million, or 80 cents per share, compared to net income of $3.9 million, or 69 cents per share, earned in the second quarter of 2004.

Net income for the quarter was negatively impacted by a one-time after-tax warranty charge of $1.5 million, or 21 cents per share, associated with purchased components that the Company incorporated into one of its product lines. The company anticipates recovering a substantial portion of its costs associated with the warranty charge from its suppliers. In accordance with applicable accounting standards, the company expects to record recoveries from its suppliers in subsequent periods.

For the first six months of 2005, Gehl reported net sales of $257.2 million, compared to $180.2 million in the first half of 2004, an increase of $77 million, or 43 percent. Net income of $10.5 million, or $1.51 per share, in the first six months of 2005 compares to net income of $6.8 million or $1.22 per share for the first half of 2004. Net income for the first six months of 2005 was similarly impacted by the one-time warranty charge described above.

Strength of the construction markets, coupled with the company's expanding production capacity, allowed it to achieve all time record quarterly sales. Second quarter 2005 sales surpassed the prior quarterly sales record of $119 million, just posted in the first quarter of this year. Construction equipment and agricultural equipment net sales were up 59 percent and 19 percent, respectively, for the quarter compared to the second quarter of 2004.

Operating profit earned in the quarter of $11.2 million, or 8.1 percent of sales, compares to $6.9 million, or 7.2 percent of sales, in the second quarter of 2004. Gross margin rates in the quarter were 19.5 percent vs. 19.9 percent in the comparable period of 2004. More than offsetting the slight gross margin rate decline was the decrease in the company's operating expenses as a percentage of sales. Total operating expenses for the second quarter of 2005 were $15.7 million (a 1.3-percent decrease year over year), which includes the pre-tax warranty charge of $2.3 million. Fixed cost leverage realized from the higher sales volume, coupled with a continued emphasis on expense control, led to this improvement.

"We are extremely pleased with our second quarter and first half results," said William Gehl, Chairman and CEO. "With the exception of our agricultural implements, all of our major product families experienced double- or, in some cases, triple-digit sales growth for the quarter and first half of the year."
 
THREE-FOR-TWO STOCK SPLIT. The company also announced today that its Board of Directors approved a three-for-two split of Gehl Co. common stock, to be effected in the form of a 50 percent stock dividend.
 
On August 24, 2005, Gehl Co. will distribute one share of Gehl common stock for every two shares of common stock held by Gehl shareholders of record as of the close of business on August 10, 2005. Issuance of the new shares will increase the number of outstanding shares of Gehl stock to approximately 10.3 million.
 
"The decision to split Gehl shares will create additional market liquidity of our common stock,” Gehl said. “This action reflects our emphasis and focus on enhancing shareholder value."

FULL YEAR OUTLOOK. The company raised its net sales outlook for the year. It is now expecting 2005 net sales in the range of $465 million to $475 million. The company also reaffirmed its prior earnings per share guidance of between $2.70 and $2.80. The current earnings guidance reflects the adverse impact of the 21 cents-per-share warranty charge taken in the second quarter of 2005.
 
Earnings per share presented in this news release are on a fully diluted, pre-stock split, basis.

Gehl Co. is a manufacturer of compact equipment used worldwide in construction and agricultural markets. Founded in 1859, the company is headquartered in West Bend, Wis., with manufacturing facilities in West Bend and Madison and Yankton, S.D. The company markets its products under the Gehl and Mustang brand names. Mustang product information is available on the Mustang Mfg. Web site. CE Attachments information is available at www.ceattach.com.