ASV cites tariffs as factor as quarterly profit, sales drop
ASV Holdings Inc., the Grand Rapids maker of skid steer loaders, posted lower than expected quarterly results Friday and said rising material costs and escalating U.S. trade tariffs hurt results.
The company said its revenue in the second quarter fell nearly 7 percent from year ago levels, to $31.9 million, well short of the $36 million analysts expected on average.
Its net income was $319,000 or 3 cents a share, down from $1.8 million a year ago. Excluding one large customer sale from a year ago, adjusted earnings were 8 cents a share, 3 cents shy of what analysts expected.
ASV CEO Andrew Rooke said in a statement that results were “below plan and impacted by several market headwinds,” including supply chain disruptions and spiking steel prices that hit just as overall demand is starting to increase.
ASV said it expects its steel costs to rise $2.5 million this year, citing trade tariffs on steel. The spike has caused a sourcing scuffle, supply delays and “had a negative impact on our sales, margins and bottom line” Rooke said.
The problems extend beyond the quarter and are expected to “restrict” ASV’s sales growth for the full 2018 year, ASV officials said.
“These challenges impact our entire industry and we are aggressively working to overcome these headwinds with initiatives that will largely offset their impact, from price surcharges introduced in May of this year, to cost and sourcing improvements which are already yielding results,” Rooke said.
On the plus side, the company said it’s in the process of relocating its Mississippi distribution functions to Grand Rapids, Minn., which it expects will eventually save $1 million a year. ASV also added 17 new dealers during the quarter.
“In the second quarter, we continued to make good progress with adding new dealers and penetrating into the rental market with sales, which are among our top corporate objectives in scaling the business,” Rooke said. “Our North American dealer rental locations now stand at 265 and our sales into rental locations accounted for approximately 15 percent of machine sales in the quarter.”
ASV’s stock price fell $1.01 or 13 percent Friday to close at $6.50 per share.
Dee DePass • 612-673-7725