Gehl Company reported second quarter income from continuing operations of $5.2 million, or $0.43 per diluted share, for the quarter ended June 30, 2008, compared with income from continuing operations of $8.8 million, or $0.71 per diluted share, for the second quarter of 2007.
Net sales for the second quarter of 2008 were $111.1 million compared to net sales of $135.3 million in the second quarter of 2007. Continued market share gains, along with the strength of the company’s international and agricultural markets, in the second quarter, partially offset the impact of the continued softness in the North American housing market and reductions in capital investments by equipment rental companies.
Sales outside of North America remained solid, representing 30 percent of total sales, an increase from 26 percent in the same period one year ago. Market share gains continued in the company’s two primary product categories, skid loaders and telehandlers. The company’s North American retail skid loader volume decreased 1 percent during the second quarter of 2008 versus the same period of 2007, while the overall industry retail numbers decreased nearly 10 percent for the quarter. The company’s telehandler retail demand declined 14 percent in the second quarter in an industry-wide market that declined more than 23 percent.
Gross margin was 20.5 percent in the second quarter of 2008 compared to 21.8 percent in the second quarter of 2007. Tight cost control and cost savings resulting from investments in manufacturing equipment partially offset the impact of lower volumes and significantly higher steel and component costs.
Selling, general and administrative expenses declined to $14.7 million during the 2008 second quarter compared to $15.7 million in the second quarter of 2007 as the company continues its focus on driving out costs. As a percent of net sales, selling, general and administrative expenses increased to 13.2 percent compared to 11.6 percent in the prior year quarter, which primarily reflected lower sales volumes.
For the first six months of 2008, Gehl reported net sales from continuing operations of $193.2 million compared to $250.6 million in the first six months of 2007. Income from continuing operations was $4.4 million, or $0.36 per diluted share, for the first six months of 2008 compared to $15.3 million, or $1.23 per diluted share, for the first six months of 2007. Results for the first half of 2008 include an after-tax charge of $1.4 million, or $0.11 per diluted share, for the adoption of Statement of Financial Accounting Standards No. 157, “Fair Value Measurements,” which was recorded in the first quarter.
“While weakness in the U.S. residential construction market provided headwinds to our business in the first half of the year, the company maintained positive operating results, which reflects our diverse markets and effective cost savings initiatives,” said William D. Gehl, chairman and chief executive officer. “As we work through these near-term challenges, the company will continue to position itself for long-term growth as evidenced by several efforts undertaken this year, including expanding our presence in international markets, broadening our product offering with the successful launch of new products and continuing to drive our performance in the markets we serve.”
2008 Full Year Outlook
Based on the company’s first half results, current backlog position, field inventory adjustments, and management’s expectation that the North American housing market will continue to experience weakness for the balance of 2008, the company adjusted its 2008 full year outlook. The company expects net sales from continuing operations in the range of $390 million to $410 million and earnings per diluted share from continuing operations of $0.85 to $1.05.
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