GRAND RAPIDS, Minn. - ASV Inc., a manufacturer of track-drive vehicles, announced Sept. 24, 2001, that it anticipates reduced net sales and net earnings for its third quarter ending Sept. 30. Reasons for the reduction include customer response to the recent acts of terrorism, the greater than expected decrease in sales of the company's model 4810 Posi-Track due to the recent introduction of the Multi-Terrain Loaders (MTL) jointly-developed with Caterpillar Inc. and the continued industry-wide slowdown in construction equipment spending.
ASV has reduced its expectations for its third quarter net sales to approximately $9 to $11 million with net earnings to be in the range of breakeven to a loss of $.02 per diluted share. Additionally, the company has reduced its net sales and net earnings estimates for fourth quarter 2001 and fiscal 2002. ASV expects net sales for fiscal 2001 to be approximately $46 to $50 million, with net earnings for fiscal 2001 expected to be in the range of $.02 to a loss of $.02 per diluted share, and expects 2002 net sales to be in the range of $70 to $80 million with net earnings in the range of $.32 to $.40 per diluted share.
Concurrently, ASV also announced the implementation of a stock buy-back program under which ASV may repurchase up to $5 million of its common stock on the open market. ASV intends to fund the repurchases with available funds.
OUTLOOK. "Even with the downturn in America’s economy in the uncertainty created by the recent act of terrorism, we believe we will achieve a positive sales growth in 2001 compared to 2000," noted ASV President Gary Lemke in a conference call broadcast online Sept. 24. "In addition with the RC-30 line of products, the new MTL models and other new products being developed we’re confident in ASV’s future and excited about our growth opportunities for 2002 and beyond."
However, Lemke related that equipment dealers have adopted a "wait and see" attitude for equipment purchases due to the sluggish economy and the uncertainty in construction markets following the Sept. 11 terrorist attacks. "The last month of our quarter has historically been our strongest month, and these events are expected to reduce our expected shipments for September," he said.
SALES BREAKDOWN. In ASV’s conference call, Tom Karges, ASV chief financial officer, split the company’s expectations into three main equipment categories, ASV’s compact RC-30 vehicle, its larger 2800 series and 4810 Posi-Track vehicles and the MTL line of Caterpillar-branded rubber track skid steer loaders jointly developed by ASV and Caterpillar.
Karges said ASV expects its RC-30 vehicle to account for approximately 38 to 40 percent of expected 2001 sales, while about 30 to 35 percent of expected sales will come from the combined sales of ASV’s 2800 series and 4810 Posi-Track vehicles. The MTL undercarriages are expected to account for about 17 to 20 percent of expected 2001 sales and are expected to be ASV’s largest source of revenue for the third quarter.
Within the larger vehicle classification, sales of the 2800 series Posi-Track units are expected to be about 5 percent higher than 2000 sales, while sales the 4810 Posi-Track will be approximately 45 percent of the 2000 figure.
The outlook for 2002 shows increases in MTL undercarriage sales and RC-30 sales. The first two MTL models were introduced to a limited number of Caterpillar dealers in the second quarter of 2001, with the remaining three models are targeted for introduction in 2002. "We anticipate our undercarriage sales for the entire MTL product line to more than double in 2002, at margins greater than our historical average," added Lemke.
However, sales of the 2800 series are expected to decrease by approximately one-half in 2002, according to Karges, and 4810 Posi-Track vehicles are likely to continue to decrease with the introduction of the additional MTL models.
A POSI-TIVE. Military spending is likely to increase following the terrorist attacks, which could be good news for sales of ASV’s remote controlled Posi-Track line. According to Lemke, the company manufactures these vehicles based on an ongoing relationship with the military and has shipped 15 of the units so far this year.
The remote controlled vehicle allows an operator to implement all standard controls in addition to providing video and audio feedback. It can be used in military operations to investigate areas for safety before sending humans into the area - operations that may become more common as military response to recent events develops.
"We have received phone calls about whether we could increase production if need be," explained Lemke, "and we said, ‘Yes.’"
The author is Internet Editor of Lawn & Landscape Online.
