Gehl Has Record Second Quarter, Announces Stock Split

July 26, 2005 — Gehl Co., West Bend, Wis., reported record quarterly net sales of $138.2 million for the quarter ended July 2, 2005 — an increase of $42.7 million, or 45%, from 2004 second quarter net sales of $95.5 million. Net income for the quarter was $5.6 million, or $.80 per share, compared to net income of $3.9 million, or $.69 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 per share, associated with purchased components that the company incorporated into one of its product lines. Gehl anticipates recovering a substantial portion of its costs associated with the warranty charge from its suppliers.

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%. 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 record quarterly sales in Q2 with sales surpassing the prior quarterly sales record of $119.0 million, just posted in the first quarter of this year. Construction equipment and agricultural equipment net sales were up 59% and 19%, respectively, for the quarter compared to the second quarter of 2004.

Operating profit earned in the quarter of $11.2 million, or 8.1% of sales, compares to $6.9 million, or 7.2% of sales, in the second quarter of 2004. Gross margin rates in the quarter were 19.5% versus 19.9% 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, which includes the pre-tax warranty charge of $2.3 million. As a percentage of net sales, operating expenses for the quarter were 11.4% compared to 12.7% in the second quarter of 2004. Fixed cost leverage realized from the higher sales volume, coupled with a continued emphasis on expense control, led to this improvement.

In related news, Gehl also announced that its Board of Directors has approved a three-for-two split of the company's common stock, to be effected in the form of a 50 percent stock dividend. On August 24, 2005, Gehl will distribute one share of its 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.