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Firm Backlog Doubles From Prior Year to $388 Million; Higher Than Anticipated Manufacturing Costs Impact Gross Margin TULSA, Okla., Aug. 8 /PRNewswire-FirstCall/ -- Global Power Equipment Group Inc. (NYSE:GEG), a leading design, engineering and manufacturing firm providing a broad array of equipment and services to the global energy, power infrastructure and process industries, today reported financial results for the second quarter ended June 30, 2005. Global Power Equipment Group reported a net loss of $1.3 million for the second quarter of fiscal 2005 or $0.03 per diluted share, on revenues of $113.6 million. This compares to net earnings of $0.3 million, or $0.01 per diluted share, on revenues of $57.0 million for the second quarter of fiscal 2004. For the six months ended June 30, 2005, the Company reported a net loss of $1.3 million, or $0.03 per diluted share, on revenues of $181.0 million. This compares to net earnings for the same period last year of $1.1 million, or $0.02 per diluted share, on revenues of $112.1 million. Second quarter 2005 and year-to-date earnings included the effect of the previously announced pre- tax charge of $1.3 million, or $0.02 per diluted share related to the retirement of the Company's former CEO. The Company's gross profit for the second quarter of 2005 totaled $11.7 million, representing a 10.3 percent gross margin compared to a gross profit of $9.1 million and a gross margin of 16.0 percent in the second quarter of last year. The effect of sharply higher than expected steel costs related to projects booked in 2004, coupled with unanticipated additional engineering and manufacturing costs on these projects, adversely impacted the Company's gross profit during the quarter. In addition, the one-week delay in closing the Williams Industrial Services Group (WISG) acquisition, and some minor non-cash charges, had a more than expected impact on the Company's reported earnings during the second quarter. For the first six months of 2005, the Company's gross margin was 11.9 percent compared to 18.7 percent in the same period of 2004. The Company will comment more fully on gross margin trends, including a presentation of the impact to estimated 2005 earnings per share, during its conference call on August 9, 2005 at 9:00 AM EDT. To listen to the conference call and view the presentation, please visit the Company's home page at http://www.globalpower.com/ . The Company generated EBITDA (earnings before interest, income taxes, depreciation and amortization) of $ 0.5 million for the second quarter of 2005, down from the $1.4 million recorded during the same period in 2004. The decrease in EBITDA was principally due a greater increase in operating expenses than the rise in gross profit. The Company had total cash, including restricted cash, of $41.6 million at June 30, 2005. At the end of the second quarter, the Company's firm backlog rose to $388 million compared to $171 million at the end of June 2004 and $321 million at the end of March 2005. With the acquisition of WISG on April 11, 2005, WISG contributed approximately $67 million to the Company's firm backlog as of that date. Included in the June 30, 2005 firm backlog is the revenue WISG expects to record over the next twelve months from a new five-year alliance agreement the Company recently entered into with a major customer for maintenance and modifications services. Commenting on the new agreement, Al Brousseau, Global Power Equipment Group's president and chief executive officer stated, "This new five-year contract represents a total of at least $150 million of business with one of the largest power generating firms in the country and cements our relationship with a long-standing customer. This new alliance-based contract, which aligns our common interests, is one of the ways we are willing to demonstrate our commitment to our customers and enhance the value of long-term relationships." Earnings Estimate Based upon information management currently has evaluated, in conjunction with this release, the Company estimates fiscal year 2005 revenue of between $410 and $430 million and diluted earnings per share of between $0.02 and $0.08, excluding an estimated $0.03 per diluted share of restructuring charges for the entire year related mainly to the retirement of the Company's former CEO. Commenting on the outlook, Al Brousseau stated, "Unfavorable steel price related adjustments and booking delays in our Heat Recovery Segment, despite a strong pipeline of international opportunities, require us to revise our current fiscal year earnings guidance. With the volatility in steel markets, we have tightened our processes to manage our costs for this important input, including pricing and lead times. We continue to see strong international demand for new power projects in Asia, the Middle East and Europe, as well as LNG and desalination projects in the Middle East that are powered by gas turbines. Because of this, we continue to believe our forward bookings and earnings prospects are bright." Non-GAAP Financial Measures This release contains disclosure of EBITDA and estimated earnings per diluted share for fiscal 2005 that exclude the effect of estimated restructuring charges, which are non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The Company believes that EBITDA is a useful measure of evaluating its financial performance because of its focus on the Company's results from operations before interest, income taxes, depreciation and amortization. EBITDA is not a measure of financial performance under generally accepted accounting principles. However, EBITDA is a common alternative measure of operating performance used by investors, financial analysts and rating agencies. A reconciliation of EBITDA to net income (loss) and of estimated earnings per diluted share excluding restructuring charges to estimated earnings is included in the exhibits to this release. About Global Power Equipment Group Oklahoma based Global Power Equipment Group Inc. is a leading design, engineering and manufacturing firm providing a broad array of equipment and services to the global energy, power infrastructure and process industries. The Company designs, engineers and manufactures a comprehensive portfolio of equipment for gas turbine power plants and power-related equipment for industrial operations, and has over 30 years of power generation industry experience. The Company's equipment is installed in power plants and in industrial operations in more than 40 countries on six continents and believes, in its product lines, it has one of the largest installed bases of equipment for power generation in the world. In addition, the Company provides its customers with value-added services including engineering, retrofit, maintenance, repair and general plant services. Additional information about Global Power Equipment Group may be found at http://www.globalpower.com/ . Statements contained in this release regarding the Company's or management's intentions, beliefs, expectations, or predictions for the future, including, but not limited to, those regarding anticipated operating results, are forward-looking statements within the meaning of U.S. federal securities laws and are subject to a number of risks, assumptions and uncertainties that could cause the Company's actual results to differ materially from those projected, including decreased demand for new gas turbine power plants, the loss of any of our major customers, the cancellation of projects, project cost overruns, including increases in prices for energy or for materials such as steel, and unforeseen schedule delays, competition for the sale of our products or services, poor performance by our subcontractors, warranty and product liability claims, delays in integrating the operations of Williams Industrial Services Group and the Company, and changes in the economic, social and political conditions in the countries in which we operate, including fluctuations in foreign currency exchange rates. Additional information concerning these factors and some of the other factors that could cause actual results to differ materially from those in, or implied by, the forward looking statements are set forth under "Risk Factors" in the Company's Form 10-K for the period ended December 31, 2004, and other reports on file with the U.S. Securities and Exchange Commission. The Company assumes no obligation to update publicly such forward-looking statements, whether as a result of new information, future events or otherwise. Company Contact: Bob Zwerneman Director of Investor Relations (918) 274-2398 GLOBAL POWER EQUIPMENT GROUP INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) June 30, December 31, 2005 2004 ASSETS Current assets: Cash and cash equivalents $ 32,458 $ 24,331 Restricted cash 9,134 16,669 Accounts receivable, net of allowance of $838 and $894 51,761 40,260 Inventories 9,342 8,857 Costs and estimated earnings in excess of billings 73,543 60,861 Deferred income taxes 9,147 10,576 Other current assets 19,956 15,966 Total current assets 205,341 177,520 Property, plant and equipment, net 22,884 22,983 Deferred income taxes 53,763 51,030 Goodwill 80,573 45,000 Intangible assets, net 27,598 4,736 Restricted cash --- 57,688 Other assets 7,558 7,937 Total assets $397,717 $366,894 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $ 18,071 $ 16,854 Accounts payable 41,475 27,852 Accrued compensation and employee benefits 8,195 4,545 Accrued warranty 9,581 9,758 Billings in excess of costs and estimated earnings 61,185 52,707 Other current liabilities 14,755 8,005 Total current liabilities 153,262 119,721 Other long-term liabilities 5,238 4,374 Long-term debt, net of current maturities 76,250 78,750 Minority interest 1,677 1,629 Commitments and contingencies Stockholders' equity: Preferred stock --- --- Common stock 469 468 Paid-in capital deficit (16,505) (17,698) Deferred compensation (63) (91) Accumulated comprehensive income 2,625 3,636 Retained earnings 174,764 176,105 Total stockholders' equity 161,290 162,420 Total liabilities and stockholders' equity $397,717 $366,894 GLOBAL POWER EQUIPMENT GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 26, June 30, June 26, 2005 2004 2005 2004 Product revenues $77,500 $57,021 $144,887 $112,147 Service revenues 36,086 --- 36,086 --- Total revenues 113,586 57,021 180,973 112,147 Cost of Product revenues 69,413 47,892 127,019 91,205 Cost of Service revenues 32,426 --- 32,426 --- Gross profit 11,747 9,129 21,528 20,942 Selling and administrative expenses 12,641 8,541 21,557 18,802 Operating income (loss) (894) 588 (29) 2,140 Interest expense 1,163 111 2,059 311 Income (loss) before income taxes and minority interest (2,057) 477 (2,088) 1,829 Income tax provision (benefit) (783) 181 (794) 695 Income (loss) before minority interest (1,274) 296 (1,294) 1,134 Minority interest 37 --- 47 --- Net income (loss) $(1,311) $296 $(1,341) $1,134 Earnings (loss) per weighted average common share: Basic $(0.03) $0.01 $(0.03) $0.02 Weighted average number of shares of common stock outstanding-basic 46,918 46,325 46,866 45,991 Diluted $(0.03) $0.01 $(0.03) $0.02 Weighted average number of shares of common stock outstanding-diluted 46,918 46,949 46,866 46,839 GLOBAL POWER EQUIPMENT GROUP INC. SUPPLEMENTAL STATISTICAL INFORMATION (in thousands) Three Months Ended Six Months Ended June 30, June 26, June 30, June 26, 2005 2004 2005 2004 Net income (loss) $(1,311) $296 $(1,341) $1,134 Add back: Income tax provision (benefit) (783) 181 (794) 695 Interest expense 1,163 111 2,059 311 Depreciation and amortization 1,402 825 2,380 1,663 EBITDA (A) $471 $1,413 $2,304 $3,803 (A) EBITDA represents earnings before interest, income taxes, depreciation and amortization. While considered the most common definition used by investors and financial analysts, the EBITDA presented above may not be comparable to similarly titled measures reported by other companies. The Company believes that EBITDA, while providing useful information, should not be considered in isolation or as an alternative to other financial measures determined under GAAP. GLOBAL POWER EQUIPMENT GROUP INC. RECONCILIATION OF NON-GAAP ESTIMATED EARNINGS TO A GAAP BASIS Twelve Months Ended December 31, 2005 (Low estimate) (High estimate) Estimated earnings per share on a non-GAAP basis $0.02 $0.08 Impact of estimated restructuring charges (0.03) (0.03) Estimated earnings (loss) per share on a GAAP basis $(0.01) $0.05 DATASOURCE: Global Power Equipment Group Inc. CONTACT: Bob Zwerneman, Director of Investor Relations of Global Power Equipment Group Inc., +1-918-274-2398 Web site: http://www.globalpower.com/

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